The Wall Street Journal op-ed must be read to be believed.
Last week, we did our best to destroy the financial system but somehow came through it. This week, Congress will have only 72 hours to ruin the Treasury’s $700 billion mortgage plan before it recesses.
If our luck holds, Hank Paulson will get the extraordinary authority he seeks. If we are really lucky, Paulson may actually fix the mess we have made. So why not give him whatever he needs?
1. Because the bill would make Paulson a federal CEO of lending instituions. Questions remain on what the Sec. of Treasury would do with those piowers.
2. The bailout will create a bigger federal deficit. The Federal Reserve will have have to borrow money to buy the mortgages. The Fed and taypayers eat the loss if the mortgage values depreciate.
3. Greater regulation is needed to make sure future bailouts aren't needed. Taxpayers can't afford to continulously bailout lending institutions. The market rewards selling mortgages to people that can't financially afford a home. Banks sell that debt off as assets. A flow of credit that eventually has to be paid.
4. The Paulson plans is a band-aid. Nothing will be changed by a bailout. Except temporary security; until the sky falls again.
Paulson's plan appear to be dead. Senator Chris Dodd has offered an alternative plan. Economist Paul Krugman likes the plan. The issue is regulation over the mortgage industry.
Lawmakers from both parties, while acknowledging the urgency of the moment, nevertheless object to giving what they characterize as a "blank check" to Treasury Secretary Henry Paulson to buy troubled assets from financial institutions. They want provisions that would explicitly protect taxpayers.
"We don't have a lot of time. We want to act but we want to act responsibly," said Senate Banking Committee Chairman Christopher Dodd, D-Conn., at a press briefing Monday afternoon.
Republican operative Patrick Ruffinni urged GOP candidates to use the bailout as a political issue and vote against it. Ruffinni has taken the post down from his blog. Kos, Digby, and Ed Kilgore pointed out how Ruffinni gleefully wanted to turn a disaster into an opportunistic wedge issue.
Republican incumbents in close races have the easiest vote of their lives coming up this week: No on the Bush-Pelosi Wall Street bailout.
God Himself couldn't have given rank-and-file Republicans a better opportunity to create political space between themselves and the Administration. That's why I want to see 40 Republican No votes in the Senate, and 150+ in the House. If a bailout is to pass, let it be with Democratic votes. Let this be the political establishment (Bush Republicans in the White House + Democrats in Congress) saddling the taxpayers with hundreds of billions in debt (more than the Iraq War, conjured up in a single weekend, and enabled by Pelosi, btw), while principled Republicans say "No" and go to the country with a stinging indictment of the majority in Congress.
This creates pressure on the "change" message. If this issue is made controversial, and Obama is not the first to make it an issue, how exactly is a Washington deal backed by Bush's Treasury Secretary "change?"
But for this to be actionable, it has to be controversial. So this can't be a few lonely voices like Coburn and DeMint. It needs to be the bulk of the Republican conference. In an ideal world, McCain opposes this because of all the Democratic add-ons and shows up to vote Nay while Obama punts.
Ruffini is one of the smartest young GOP operatives. There is good reason to believe Republicans will vote against any bailout package. It's easier to watch Rome burn and blame the Democrats for not putting out the fire.